Correlation Between Federated Pennsylvania and Federated Emerging
Can any of the company-specific risk be diversified away by investing in both Federated Pennsylvania and Federated Emerging at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Federated Pennsylvania and Federated Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Pennsylvania Municipal and Federated Emerging Market, you can compare the effects of market volatilities on Federated Pennsylvania and Federated Emerging and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Federated Pennsylvania with a short position of Federated Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Pennsylvania and Federated Emerging.
Diversification Opportunities for Federated Pennsylvania and Federated Emerging
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FEDERATED and Federated is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Federated Pennsylvania Municip and Federated Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Emerging Market and Federated Pennsylvania is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Federated Pennsylvania Municipal are associated (or correlated) with Federated Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Emerging Market has no effect on the direction of Federated Pennsylvania i.e., Federated Pennsylvania and Federated Emerging go up and down completely randomly.
Pair Corralation between Federated Pennsylvania and Federated Emerging
Assuming the 90 days horizon Federated Pennsylvania Municipal is expected to generate 0.86 times more return on investment than Federated Emerging. However, Federated Pennsylvania Municipal is 1.17 times less risky than Federated Emerging. It trades about 0.07 of its potential returns per unit of risk. Federated Emerging Market is currently generating about 0.05 per unit of risk. If you would invest 1,006 in Federated Pennsylvania Municipal on September 4, 2024 and sell it today you would earn a total of 10.00 from holding Federated Pennsylvania Municipal or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Pennsylvania Municip vs. Federated Emerging Market
Performance |
| Timeline |
| Federated Pennsylvania |
| Federated Emerging Market |
Federated Pennsylvania and Federated Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Pennsylvania and Federated Emerging
The main advantage of trading using opposite Federated Pennsylvania and Federated Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Pennsylvania position performs unexpectedly, Federated Emerging can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Federated Emerging will offset losses from the drop in Federated Emerging's long position.| Federated Pennsylvania vs. Federated Emerging Market | Federated Pennsylvania vs. Federated Mdt All | Federated Pennsylvania vs. Federated Mdt Balanced | Federated Pennsylvania vs. Federated Global Allocation |
| Federated Emerging vs. Shelton Emerging Markets | Federated Emerging vs. Mondrian Emerging Markets | Federated Emerging vs. Dodge Cox Emerging | Federated Emerging vs. Templeton Emerging Markets |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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